Post session - Quick review

Political Uncertainty, European markets' weakness and hawkish guidance of RBI in its Mid-quarter policy review pulled the markets lower and the barometer gauges went home with a cut of a percent and half on Tuesday.  The disappointment crept into Indian equity markets, after apex bank, in its effort to prop up the sagging growth of the economy, slashed repo rate by much anticipated 25 basis points, but left CRR, key liquidity tool unchanged at 4%, which in turn led to heavy sell off in Banking counter, besides  other rate sensitive’s. Another jolt came when M Karunanidhi's DMK withdrew its support to the UPA government protesting against the government's perceived dithering on a UN resolution on war crimes in neighbouring country Sri Lanka. Although, Finance Minister came with an assuring statement that UPA government was stable despite DMK pull-out, bringing some recuperation. However it was short lived and the negative opening of European market, weighed on the sentiment of Indian equity markets.

In the dramatic session of trade, benchmark 30 share index-Sensex- despite offloading over 300 points, managed to negotiate a close above the crucial 19k level, 50 shares widely followed index- Nifty- losing close to 75 points, concluded below the psychological 5750 mark. Broader indices, too witnessed hefty profit-booking, incurring losses of over a percent each on BSE.

On the global front, Asian pacific shares rebounded on Tuesday, as concerns over the revival of the Euro-zone’s debt crisis receded. Large constituents in the Nikkei that dipped in the previous session recovered on Tuesday. Exporters also moved higher, supported by the weaker yen. However, what pressurized the domestic markets was the weakness of European counterparts, which yet again weighed down by the investor’s worries about the uncertainty over a bailout for Cyprus made a soft start.

Closer home, benchmarks took a hit for the worst in the late morning deals after Reserve bank of India highlighted the limited room for monetary easing, which in turn dampened investors’ sentiment. Benchmarks though negotiated some recovery from day’s low in the dying hours of trade. In the broad -based selling, Realty, Capital Goods and Metal counters turned out to be the worst performers, with no gainers on board.

Meanwhile, sugar stocks which were trading stronger on hopes of price decontrol decision, turned sour. Additionally, Telecom stocks too weighed down by massive losses of over 4% in Bharti Airtel, after few media reports suggested of Delhi High Court summoning Bharti Airtel’s chairman Sunil Mittal and others in additional spectrum allocation case. According to reports, the court took cognisance of a CBI charge sheet, and asked the chairman and other accused to appear in court on April 11 2013, in the case of additional spectrum allocation during the NDA regime. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 887: 1965 while 114 scrips remained unchanged. (Provisional)

The BSE Sensex lost 277.80 points or 1.44% and settled at 19015.40. The index touched a high and a low of 19378.61 and 18939.47 respectively. 5 stocks were up, while 25 stocks declined on the index (Provisional)

Broader indices concluded in red; BSE Mid cap and Small cap indices were down by 1.29% and 1.52% respectively. (Provisional)

On the BSE Sectoral front, Realty down by 3.56%, Capital Goods down by 2.70%, Metal down by 2.54%, PSU down by 2.14% and Power down by 1.97%, were the top losers, while there were no gainer in the space.

The top gainers on the Sensex were Gail India up by 2.49%, Bajaj Auto up by 1.42%, Sun Pharma up by 0.65%, ITC up by 0.30% and Maruti Suzuki up by 0.06%. On the flip side BHEL down by 4.97%, Bharti Airtel down by 4.19%, Jindal Steel down by 4.06%, Sterlite Industries down by 3.84% and ONGC down by 3.26% were the top losers on the Sensex. (Provisional)

Meanwhile, for the second time in 2013, Reserve Bank of India (RBI), in an effort to revive the faltering economy, went ahead and slashed repo rate by 25 basis points  at 7.50% against 7.75% earlier in its ‘Mid-Quarter Monetary Policy Review: March 2013, but left its Cash Reserve Ratio (CRR) unchanged at 4%. Consequently, reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, now stands adjusted to 6.50% with immediate effect. Meanwhile, the Marginal Standing Facility (MSF) rate, too determined with a spread of 100 basis points above the repo rate, stands adjusted to 8.50% with immediate effect.

Besides, that apex bank, in its policy review, also exuded its commitment towards actively managing liquidity through various instruments, including open market operations (OMO), so as to ensure adequate flow of credit to productive sectors of the economy. The reduction of CRR of banks by 25 basis points, effective from February 9 and open market purchases of Rs 20,000 crore since February have enabled money market rates to remain anchored to the policy repo rate.

The central bank on January 29, in order to support an economy set for its slowest growth in a decade, slashed its repo rate by 25 basis points at 7.75% against 8% earlier, and cut cash reserve ratio (CRR) of scheduled banks by 25 basis points from 4.25% to 4.0%.

Notably, on guidance front, RBI highlighted that even as the policy stance emphasizes addressing the growth risks, the headroom for further monetary easing remains quite limited. RBI has been cautious in lowering rates as it fights inflation and record high Current Account Deficit (CAD) in Asia’s third largest economy.

In its reports, RBI has further added that, notwithstanding moderation in non-food manufactured products inflation, headline inflation is expected to be range-bound around current levels over 2013-14 in view of sectoral demand-supply imbalances, the ongoing corrections in administered prices and their second-round effects. Worryingly, it also emphasized that risks on account of the CAD continue to remain significant despite the likely improvement in Q4 over an expected sharp deterioration in Q3 of 2012-13.

India VIX, a gauge for markets short term expectation of volatility gained 5.42% at 16.71 from its previous close of 15.85 on Monday. (Provisional)

The S&P CNX Nifty lost 90.60 points or 1.55% to settle at 5,744.65. The index touched high and low of 5,863.60 and 5,724.30 respectively.7 stocks advanced against 43 declining on the index. (Provisional)

The top gainers on the Nifty were Gail up by 2.65%, Bajaj-Auto was up by 1.59%, Ranbaxy was up by 1.37%, Lupin was up by 0.94% and Sun Pharmaceuticals was up by 0.67%. On the other hand, BHEL down by 5.06%, Bharti Airtel down by 4.39%, DLF down by 4.09%, Reliance Infrastructure down by 3.91% and Sesa Goa down by 3.77% were the top losers. (Provisional)

The European markets were trading in red, France’s CAC 40 down by 0.61%, Germany’s DAX down by 0.52% and the United Kingdom’s FTSE 100 down by 0.26%.

Asian markets recovered from earlier session’s steep falls and ended mostly higher on Monday. However, investors remained cautious ahead of US Federal Reserve's two-day policy-setting meeting starting on Wednesday and the change of leadership at the Bank of Japan this week. Japan's Nikkei went home with strong gains snapping previous sessions’ losses, as Japanese tech exporters benefited from the dollar’s rebound against the yen. Chinese mainland market closed higher, with gains from the volatile property sector, while South Korean market ended in green zone with gains in heavyweight consumer-electronics producer Samsung Electronics’ shares.